The Deputy Governor of the Bank of Namibia, Ebson Uanguta, says numerous Small and Medium Enterprises (SMEs) missed the mark during the execution of the Targeted Intervention Programme for Employment and Economic Growth (TIPEEG).
Instead of investing in the future, they spent on extravagant materials, he asserted.
Uanguta stated that TIPEEG offered opportunities that could have bolstered the local economy during challenging times.
Launched in 2011, TIPEEG was a three-year programme where the government allocated N$14 billion to initiate various projects, aiming to create approximately 104,000 jobs.
The priority sectors of TIPEEG included agriculture (with an investment of N$3.6 billion and 26,171 jobs to be created), transport (N$3.1 billion for 33,276 jobs), housing and sanitation (N$1.8 billion for 35,076 jobs), tourism (N$649 million for 10,000 jobs), and public works (N$5.5 billion for 82,000 jobs). However, by the end of the programme in 2014, only 83,000 jobs were created, of which merely about 15,000 were permanent positions.
Uanguta said: “If SMEs had invested significantly in the economy, our economic trajectory would be different. The government was investing billions, but if such funds are spent on non-productive aspects of the economy, there is nothing to fall back on when the government reduces spending. Hence, it is crucial to focus on sustainable investments.â€
During the Tax Appreciation Day organised by the Namibia Revenue Agency (NamRA), Uanguta highlighted the importance of tax contributions towards the country’s development and sustainability.
“Wealth can only be redistributed through tax. However, if you spend on lavish materials, everything collapses when the economy underperforms. Therefore, it is vital to invest through the budget, ensuring taxes and compliances are completed, which are fundamental aspects of good governance in all spheres of society.â€
He further stressed the importance of the government directing taxpayers’ resources into productive economic ventures. He believes that seeing the budget allocated towards building necessary infrastructures will inspire people.
Uanguta, who played a pivotal role in operationalising NamRA, stated that: “If public health facilities surpass the quality of private ones, it will foster trust in tax compliance, ensuring that the state’s received contributions are productive.â€
He also mentioned that increased revenue collection boosts the country’s sovereign rating. This is because lending institutions trust the evidence of affordability, leading to reduced interest rates when borrowing.
“With NamRA’s robust revenue collection, those lending to the government will be more willing and eager because they see capacity. Therefore, NamRA should continue enforcing tax compliance and improving revenue collection, and we will soon see our credit rating improving,†he added.
For the 2023-2024 financial year, NamRA collected N$86 billion, with N$10 billion paid in refunds.
